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Do understaffed businesses need to be more flexible?

Australian businesses are facing a raft of cost pressures, from rising inflation to skill shortages. Record low unemployment and a strong labour market could force SMEs to embrace the flexibility of hybrid working.

24 June 2022 

When the Australian Bureau of Statistics (ABS) released its employment figures for May 2022, the unemployment rate had stayed steady at 3.9%, the lowest rate in almost 50 years, while the underutilisation rate fell 0.3 points to a 40-year low of 9.6%.

Bjorn Jarvis, Head of Labour Statistics at the ABS, said the increase in May 2022 was the seventh consecutive increase in employment, following the easing of lockdown restrictions in late 2021.

“Average employment growth over the past three months (30,000) continues to be stronger than the pre-pandemic trend of around 20,000 people per month,” he said

Unsurprisingly, a record low jobless rate has challenged businesses looking for workers. The most recent ABS Business Conditions and Sentiments release, published Thursday (23 June) found that a lack of applicants (76%) was the most frequent reason businesses said they were struggling to find staff, followed by applicants not having the required skills (59%).

Large and medium-sized businesses (66% and 62%) were more likely than small businesses (29%) to have difficulties finding suitable staff, according to the ABS. However, nearly half (46%) of small businesses affected were impacted to a great extent.

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What’s the solution?

The answer for many businesses is maintaining the flexibility that was required during the pandemic-induced lockdowns of the last two years. A hybrid working environment is an important part of the equation and something many workers value, particularly in Australia.

According to the HubSpot 2022 Hybrid Work Report, 61% of Australian workers said that their team is working effectively in a hybrid environment, placing Australia first among surveyed nations. The UK was second (56%), with Ireland and Canada tied for third (50%). Additionally, 39% of workers said their productivity improved with hybrid working, with only 11% feeling it had declined and the remaining 50% finding no productivity difference.

Katie Burke, HubSpot’s Chief People Officer, said one key learning over the past year is that caring and listening are table stakes.

“The companies who will be successful in 2022 and beyond will match that listening with action, setting bold strategies for the new future of work. For us at HubSpot, that's focusing on making sure our commitment to flexibility scales with our company in a way that is fair, inclusive, and friction-free, no matter where you choose to work from,” she said.

The preference for hybrid arrangements is also detailed in a recent PwC report, Balancing Act: The New Equation in hybrid working.

The report found that the average number of days that Australian knowledge-based workers want to work from home over the next year is 3.4 days, leaving 1.6 days per person, per week, in the office.

“For organisations, it can therefore be reasonably expected that the majority of workers (74%) will look to work a minimum of three days a week from home,” the report noted.

This combination of employee preference and the low unemployment environment puts workers in a position of strength to prioritise their needs and seek employers that understand the benefits of hybrid working.

“In the new world of work, the balance of power sits with employees seeking hybrid working. Given Australia’s tight employment market and skills shortages, organisations will have to offer hybrid working as part of their EVP (employee value proposition) in order to attract and retain the best talent,” the PwC report added.

“This will need to be more than a bullet point on their website. Hybrid working will need to be embedded in the workplace culture and in the way that organisations think about building relationships among colleagues, mentoring junior staff and fostering innovation.”

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